The flickering screen issues I had been experiencing with my Samsung Galaxy S7 has been diagnosed by Samsung Service Centre due to 'screenburn'.

 

My understanding of AMOLED screen technology is where the item or theme displayed is black, the pixels on the black section are not active.  My Homescreen and screen backgrounds are all black, only the apps and app folders display colours.  The display set up on my S7 is the same as I had on my Samsung S5 which also had an AMOLED screen, and I never experienced any issues with its screen.  Neither phone had 'Always On DIsplay' activated (I don't think it was ever a feature of the S5), and even if it was, my themes and backgrounds are black. 

 

If my understanding is correct, how did the 'screenburn' occur? 

Well, I think you're looking at this backwards; any time I've seen a burnt screen it was a combination of a static display and high brightness + contrast burning the bright parts of the image in.